Some people claim that DAG (directed acyclic graph) technologies like the IOTA’s Tangle or Byteball will be able to scale (process large transaction volumes) better than blockchain-based technologies like Bitcoin and Ethereum.

Let me start by saying that only a few people in the world are qualified to offer an expert opinion on the question of whether a blockchain or DAG perform better. They make a great deal of money, and their time is generally too valuable to comment on Internet forums. This is why you see a lot of DAG advocates claim that it is superior without informed counterpoints.

I will admit that I’m not qualified to offer an expert opinion on this either.

However, the claim that a DAG scales better than Blockchain should not be accepted at face value. A number of people smarter than I have said that validating a DAG is far more labor intensive than a block.

There no magic solution to the problem of keeping thousands or millions of nodes synchronized, and DAG based networks like IOTA actually rely on a single Coordinator node which keeps the network from fragmenting. This is the very thing that cryptocurrencies were created to avoid!

While some see the need to put transactions in a block as a negative, the blockchain is actually a very efficient, market-driven way for the users of a network to bid on processing capacity. Transaction fees ensure that the network is always capable of processing the most valuable transactions, whereas a DAG-based network may be overwhelmed and fail if load gets too high. Centralized “coordinator” nodes may solve this problem, but if so, DAG advocates cannot claim that they are necessarily more distributed and scalable than Bitcoin.

Furthermore, with second-layer technologies like Lightning Network, Bitcoin has explicit and unlimited scaling options. The scaling potential of coordinator/master node model in DAG-based currencies is far less clear.